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Staple Food Price Dynamics and
The Covid-19 Crisis in Southern
Africa: Malawi
Presented at the Malawi Policy Event Learnin...
PRESENTATION STRUCTURE
• Introduction
• Key messages
• COVID-19-related market disruptions and maize price behavior in
sel...
INTRODUCTION
• After February 2020: COVID 19 introduction in Southern Africa
• Control measures to curb the spread of the ...
Introduction: Major Maize Production and Consumption Areas
• In Mozambique, Zambia and Malawi, most of maize supply is loc...
Introduction: Major Maize Production and Consumption Areas (cont’d)
• In Zambia, the Eastern, and Central provinces may be...
Key Messages
• We focus on local staples and community-level markets which
are often overlooked in international data coll...
Key Messages (continued)
• In responses to future shocks, care should be taken to
minimize disruptions in local market ope...
Methodology
• Our focus is to test whether the disruptions due to Covid-19 have
affected prices of agricultural commoditie...
MAIZE GRAIN PRICES CONSISTENTLY HIGHER IN DEFICIT AREAS IN MALAWI
COVID-19-related market disruptions and maize price beha...
MAIZE GRAIN PRICES CONSISTENTLY HIGHER IN DEFICIT AREAS IN MALAWI AND
ZAMBIA
COVID-19-related market disruptions and maize...
Maize grain prices increased in Lesotho- a deficit country, but decreased in
Mozambique
COVID-19-related market disruption...
• Many markets experienced a rapid deviation in prices from predicted prices
COVID-19-related market disruptions and stapl...
RAPID INCREASE IN THE SHARE OF MARKETS WITH LOWER-THAN-PREDICTED PRICES FOR
MALAWI
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
...
• Prices declined in both urban and rural areas in Malawi, relative to model predictions
• Maize prices declined significa...
SUMMARY AND RECOMMENDATIONS
 COVID-19 pandemic has led to some governments measures to control
the spread of the COVID-19...
SUMMARY AND RECOMMENDATIONS (CONT’D)
 Other direct confinement and containment measures too have led to a
general downwar...
SUMMARY AND RECOMMENDATIONS (CONT’D)
 The potential negative impact from the observed decline in prices shows
the critica...
SUMMARY AND RECOMMENDATIONS (CONT’D)
 Government support to small food supply businesses would be a good
initiative to mi...
FURTHER INFORMATION
https://www.akademiya2063.org/events.php?lang=en
www.resakss.org
https://www.iwmi.cgiar.org/
Thank
You
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Malawi Policy Learning Event - Staple Food Price Dynamics - April 28, 2021

This presentation was delivered by Dr. Greenwell Matchaya, ReSAKSS-SA Coordinator

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Malawi Policy Learning Event - Staple Food Price Dynamics - April 28, 2021

  1. 1. Staple Food Price Dynamics and The Covid-19 Crisis in Southern Africa: Malawi Presented at the Malawi Policy Event Learning Event by Greenwell Matchaya*, PhD g.matchaya@cgiar.org Co-contributors: Sibusiso Nhlengethwa*, Bhekiwe Fakudze*; Ikhothetsang Greffiths* *,ReSAKSS/IWMI
  2. 2. PRESENTATION STRUCTURE • Introduction • Key messages • COVID-19-related market disruptions and maize price behavior in selected countries • COVID-19-related market disruptions and maize price behavior- Malawi • Conclusions and recommendations
  3. 3. INTRODUCTION • After February 2020: COVID 19 introduction in Southern Africa • Control measures to curb the spread of the pandemic : restrictions of the movement of people, Market bans, border crossing restrictions, curfews, etc. • Market disruptions • A focus on maize markets in Malawi, and the SADC
  4. 4. Introduction: Major Maize Production and Consumption Areas • In Mozambique, Zambia and Malawi, most of maize supply is locally produced. In Lesotho, imports from RSA -huge • But there is also a significant cross-border trade among these countries • Major production regions in Mozambique include Zambezia, Nampula, Manica, and Tete provinces, • While Inhambane, Gaza and Maputo are generally deficit areas
  5. 5. Introduction: Major Maize Production and Consumption Areas (cont’d) • In Zambia, the Eastern, and Central provinces may be considered surplus, • While the more urban Lusaka and Copperbelt are generally deficit areas • The Southern Region in Malawi is generally a food deficit area, • whereas the Northern and Central regions may be considered food surplus, although there are internal spatial variations.
  6. 6. Key Messages • We focus on local staples and community-level markets which are often overlooked in international data collection efforts. • In most of the countries examined, price effects of the Covid crisis propagated very quickly across space. • The magnitude of price deviations also increased very quickly. • In some countries, the shock caused prices to rise in deficit areas and decline in surplus areas as transport restrictions took hold. • But in countries that export staples regionally eg. Malawi, Zambia, Mozambique, trade restrictions overrode those effects and prices fell both in surplus and deficit areas. 6
  7. 7. Key Messages (continued) • In responses to future shocks, care should be taken to minimize disruptions in local market operations. • Effects of local market disruptions on incomes, access to food, etc. can be devastating. • Measures should be coordinated across countries to respond to crises while minimizing interference in cross-border trade. 7
  8. 8. Methodology • Our focus is to test whether the disruptions due to Covid-19 have affected prices of agricultural commodities. • We use time series price data, to analyse and predict trends • For the predictions of prices, we utilize the Seasonal Auto Retrogressive Integrated Moving Average models (SARIMA) • We also cross-check the robustness of the results with the Difference- in-Difference methodologies where appropriate
  9. 9. MAIZE GRAIN PRICES CONSISTENTLY HIGHER IN DEFICIT AREAS IN MALAWI COVID-19-related market disruptions and maize price behavior- Southern Africa 0 50 100 150 200 250 300 350 Malawi Kwacha/kg Maize prices South Centre North 0 50 100 150 200 250 300 350 400 Malawi Kwacha/kg Maize prices Blantyre Lilongwe Mzimba
  10. 10. MAIZE GRAIN PRICES CONSISTENTLY HIGHER IN DEFICIT AREAS IN MALAWI AND ZAMBIA COVID-19-related market disruptions and maize price behavior- Southern Africa 0,00 20,00 40,00 60,00 80,00 100,00 120,00 ZMW/Kg Maize Grain Prices in Zambia Average Prices in Surplus Provinces Average Prices in Deficit Provinces 0 50 100 150 200 250 300 350 400 1st Week Jan 4th Week Jan 2nd Week Feb 1s Week March 1st week April 4th Week April 3rd Week May 2nd Wk Jun19 1st Wk Jul19 4th Wk Jul19 2nd Wk Aug19 1st Week Sep 4th Week Sep 3rd Week Oct 2nd Week Nov 1st Week Dec 4th Week Dec 3rd Week Jan 1st Week Feb 4th Week Feb new_maize 3rd Week April 2nd Week May 2019 2020 Malawian Kwacha (MK/kg) Price (MK/kg) Blantyre Nsanje
  11. 11. Maize grain prices increased in Lesotho- a deficit country, but decreased in Mozambique COVID-19-related market disruptions and maize price behavior Southern Africa 0 1 2 3 4 5 6 7 8 9 LSL/KG Urban price dynamics in Lesotho Observed Price Maseru Predicted Price Maseru Observed price Berea predicted price Berea
  12. 12. • Many markets experienced a rapid deviation in prices from predicted prices COVID-19-related market disruptions and staple food price behavior outside Southern Africa
  13. 13. RAPID INCREASE IN THE SHARE OF MARKETS WITH LOWER-THAN-PREDICTED PRICES FOR MALAWI 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jan Feb Mar Apr May Rural primary markets Rising prices Declining prices 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jan Feb Mar Apr May Urban markets Rising prices Declining prices COVID-19-related market disruptions and maize price behavior-Malawi
  14. 14. • Prices declined in both urban and rural areas in Malawi, relative to model predictions • Maize prices declined significantly in March, April and May but started to stabilize in June with the easing of confinement measures. More reduction in surplus markets 0 50 100 150 200 250 300 350 PRICE PER KG(MK) Urban Maize prices Actual Price Predicted Price 0 50 100 150 200 250 300 350 PRICE PER KG(MK) Rural primary maize markets Actual Price Predicted Price COVID-19-related market disruptions and maize price behavior-Malawi
  15. 15. SUMMARY AND RECOMMENDATIONS  COVID-19 pandemic has led to some governments measures to control the spread of the COVID-19 pandemic  Government pronouncements relating to the need to observe social distancing to limit the spread, have impeded arbitrage between markets and further led to rising supplies relative to demand,  The reduced demand, together with an increase in supplies from the harvest season have led to rapidly falling prices in local markets
  16. 16. SUMMARY AND RECOMMENDATIONS (CONT’D)  Other direct confinement and containment measures too have led to a general downward trend in prices.  Affecting the movement of goods and impacting on the cost of food consumed in the population.  This happened in each of the focus markets Malawi • The confinements may have created difficulties in cross-border trade and may have played a greater role in determining price behavior across the board in each country, not just in border areas.
  17. 17. SUMMARY AND RECOMMENDATIONS (CONT’D)  The potential negative impact from the observed decline in prices shows the critical importance of trans-border trade for smallholder farmers and small businesses.  For instance, while the downward prices many have been good for consumers, they likely hurt the ability of producers and aggregators to produce in future. • To avoid enormous negative effects on demand, future restrictions and interventions should be sequenced such that the impact on domestic markets and cross-border operations are minimized
  18. 18. SUMMARY AND RECOMMENDATIONS (CONT’D)  Government support to small food supply businesses would be a good initiative to minimize the impact on producer and aggregator households. 
  19. 19. FURTHER INFORMATION https://www.akademiya2063.org/events.php?lang=en www.resakss.org https://www.iwmi.cgiar.org/
  20. 20. Thank You

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